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Grain markets await more Chinese purchases

A commodities economist says the grain markets are disappointed with the lack of immediate purchases from China as more details are unveiled from last week’s meeting.

“I think the markets had unrealistic expectations that we were going to immediately see orders on the books,” says Arlan Suderman.

Suderman, with Stone X Group, says he’s expecting China to buy more U.S. soybeans this fall, but they might hold off on more purchases for a few weeks.

“To allow prices to come to them, let the market think China isn’t back and they can buy soybeans at a cheaper price,” he says. “As for the other products, I think the market was disappointed we didn’t have major announcements of immediate purchases, but I do expect those to happen. It’s a matter of being patient.”

On Sunday, the U.S. Trade Representative’s Office released details of a new “30-for-30” trade framework with China. The two countries have recommended about $30 billion in goods on each side that could receive more favorable tariff treatment, including several ag products.

“We do see on the list: corn, grain sorghum and wheat. They don’t have an immediate need for a lot for any one of those,” he says. “In order to hit the $17 billion in ag commodities annually, in addition to the 25 million metric tons of soybeans, I think it will be spread around to a number of commodities.”

Beef, rice, dairy and several cotton-related products are also included on China’s list. USTR says the framework is aimed at more favorable tariff treatment and is separate from existing agricultural purchase commitments.

Suderman says the commodity markets are back to business as usual during harvest until China returns in the next few weeks to buy more U.S. ag products.